Good Faith Deposit, Non-Delivery Feeand Shortfall Fee

BORROWER CERTIFICATE

Good Faith Deposit, Non-Delivery Feeand Shortfall Fee

(Cash and Rate Lock Loan Financing Methods

Multifamily Affordable Housing Product Line)

THIS BORROWER CERTIFICATE (“Certificate”) dated as of the date appearing with the Borrower’s signature block on this Certificate (“Effective Date”), is made by [NAME OF BORROWER], a [DESCRIPTION OF BORROWER], together with its permitted successors and assigns (“Borrower”) and delivered to FANNIE MAE (“Fannie Mae”), a federally-chartered and stockholder-owned corporation organized and existing under the Federal National Mortgage Association Charter Act, 12 U.S.C. §1716, etseq.

RECITALS

A.[Name of Lender], [description of lender] (“DUS Lender”) is about to issue a commitment, dated ______(“Permanent Mortgage Loan Commitment”), to make a permanent mortgage loan (“Permanent Mortgage Loan”) to the Borrower, in an original principal amount not to exceed $______(“Maximum Mortgage Loan Amount”), to provide permanent mortgage financing for a multifamily housing project known as ______, located in ______(“Project”).

B.As more particularly described in the Permanent Mortgage Loan Commitment, the DUS Lender’s obligations under the Permanent Mortgage Loan Commitment will be subject to various conditions including (1) completion of construction (or rehabilitation) of the Project in accordance with the approved plans and (2) lease-up and stabilization of the Project at not less than 90% occupancy for three consecutive calendar months as adjusted for economic vacancy in accordance with the DUS Guide (“Minimum Occupancy Requirement”) unless waived by Fannie Mae, both conditions to be satisfied on or before ______or a later date as extended by Fannie Mae (“Final Delivery Date”).

C.Subject to receipt of this Certificate and the Security Instrument (as that term is defined below) Fannie Mae has agreed to confirm its commitment to purchase the Permanent Mortgage Loan from the DUS Lender under Forward Commitment Confirmation number ______(“Forward Commitment”).

D.The DUS Lender intends to lock the interest rate on the Permanent Mortgage Loan under the Permanent Mortgage Loan Commitment if Fannie Mae will lock the interest rate on the Permanent Mortgage Loan under the Forward Commitment.

E.To induce Fannie Mae to lock the interest rate on the Permanent Mortgage Loan under the Forward Commitment (“Rate Lock”), Fannie Mae requires that the Borrower execute and deliver this Certificate, together with a *[mortgage][deed of trust][deed to secure debt] (“Security Instrument”) securing the Borrower’s obligations under this Certificate.

* Select correct term. Delete the remaining terms and these instructions.

F.Pursuant to the Forward Commitment, Fannie Mae requires the Borrower to pay or otherwise provide for:

(1)a good faith deposit in an amount equal to two percent of the Maximum Mortgage Loan Amount (“Good Faith Deposit”) as further discussed in Section 3 below;

(2)a non-delivery fee (“Non-Delivery Fee”) as further discussed in Section 4 below; and

(3)a short fall fee (“Shortfall Fee”) as further discussed in Section 5 below.

In consideration of the above recitals and the promises contained in this Certificate, the receipt and sufficiency of which are acknowledged, the Borrower agrees as follows:

SECTION 1.Borrower’s Agreement to Close Permanent Mortgage Loan. In consideration of the DUS Lender’s Permanent Mortgage Loan Commitment and to induce Fannie Mae to confirm the Forward Commitment with the Rate Lock, the Borrower agrees to close the Permanent Mortgage Loan with the DUS Lender (“Permanent Mortgage Loan Closing”) not less than two business days prior to the Final Delivery Date on the terms set forth in the Permanent Mortgage Loan Commitment as such terms may be changed in accordance with Section 2(c) and for the amount for which the Permanent Mortgage Loan underwrites at the time of the Permanent Mortgage Loan Closing as determined by the DUS Lender.

SECTION 2.Borrower Acknowledgements. The Borrower acknowledges and agrees that:

(a)Fannie Mae has agreed to confirm the Forward Commitment.

(b)The Borrower is causing Fannie Mae, at the time of the Rate Lock, to take a position in the financial markets in reliance on the delivery of the Permanent Mortgage Loan in accordance with the Permanent Loan Commitment. Failure of the Borrower to close the Permanent Mortgage Loan in accordance with the Permanent Loan Commitment will cause Fannie Mae to incur economic damages and that Fannie Mae will be entitled to damages for the detriment caused thereby.

(c)Fannie Mae shall have the right, from time to time, in its sole discretion to:

(1)extend the Final Delivery Date;

(2)lessen the Minimum Occupancy Requirement by the percentage of occupancy, the type of occupancy or the time period over which the occupancy requirement must be met; and

(3)waive any condition to the closing or delivery of the Permanent Mortgage Loan or any term or condition of the Permanent Mortgage Loan Commitment or the Forward Commitment or to otherwise lessen any standard of performance or achievement required of the Property or the Borrower or any Key Principal of the Borrower as a condition to the closing or delivery of the Permanent Mortgage Loan under the Permanent Mortgage Loan Commitment or the Forward Commitment as it may deem fit in its sole discretion;

and the Borrower shall remain obligated to close the Permanent Mortgage Loan as set out in Section 1.

SECTION 3.Good Faith Deposit. Pursuant to the Forward Commitment, Fannie Mae requires the Borrower to pay or otherwise provide for the payment of a Good Faith Deposit in an amount equal to two percent of the Maximum Mortgage Loan Amount.

*[The Borrower has paid the Good Faith Deposit in an amount equal to $ ______to the DUS Lender for the account of Fannie Mae.]

*[The Borrower has caused the issuance of an irrevocable letter of credit in the amount of $______, expiring on ______and naming Fannie Mae as the beneficiary. The letter of credit will be available to Fannie Mae as a source of payment of the Good Faith Deposit.]

* Select correct description. Delete the other description and these instructions.

The Good Faith Deposit will not bear interest or provide any other investment return to the Borrower while held by Fannie Mae. Should the Non-Delivery Fee or the Shortfall Fee become due, Fannie Mae will apply the Good Faith Deposit towards the fee that is due (or, if applicable, draw on the letter of credit held for the Good Faith Deposit). If the amount of the fee due exceeds the Good Faith Deposit, the Borrower will be responsible to pay the excess. If no Non-Delivery Fee or Shortfall Fee becomes due, Fannie Mae will refund the Good Faith Deposit to the Borrower when the Lender delivers the Permanent Mortgage Loan to Fannie Mae.

SECTION 4.Non-Delivery Fee. If (i) Fannie Mae terminates the Forward Commitment in accordance with its terms before the Final Delivery Date, or (ii) by no later than the Final Delivery Date, the Permanent Mortgage Loan has not been made by the DUS lender to the Borrower, or the DUS Lender has not delivered the Permanent Mortgage Loan for purchase to Fannie Mae or Fannie Mae determines that the Mortgage Loan Delivery Package for the Permanent Mortgage Loan is not acceptable (“Delivery Failure”), then the Borrower will pay to Fannie Mae a non-delivery fee (“Non-Delivery Fee”) in accordance with this Section. The Non-Delivery Fee will be due and payable on the first to occur of (1) the date Fannie Mae terminates the Forward Commitment in accordance with its terms or (2) if there is a Delivery Failure, the Final Delivery Date. In the event of a partial reduction to the Loan Amount, no Non-Delivery Fee will be due, but a Shortfall Fee may apply.

(a)Stabilization Failure. If the Permanent Mortgage Loan failed to close on or before the Final Delivery Date because, in spite of the best efforts of the Borrower, the Project failed to satisfy the Minimum Occupancy Requirement on or before the Final Delivery Date (“Stabilization Failure”), the Non-Delivery Fee will be the amount calculated in accordance with Exhibit A.

(b)Any Other Reason. If the Permanent Mortgage Loan failed to close on or before the Final Delivery Date for any reason other than a Stabilization Failure or if Fannie Mae terminated the Forward Commitment in accordance with its terms before the Final Delivery Date, the Non-Delivery Fee will be the amount calculated in accordance with Exhibit B.

(c)Application of Good Faith Deposit towards Non-Delivery Fee. Fannie Mae will apply the Good Faith Deposit towards the Non-Delivery Fee (or, if applicable, draw on the letter of credit held for the Good Faith Deposit). If the amount of the Non-Delivery Fee exceeds the Good Faith Deposit, the Borrower will be responsible to pay the excess.

SECTION 5.Shortfall Fee. If the Permanent Mortgage Loan closes but the original principal amount of the Permanent Mortgage Loan (“Actual Loan Amount”) is less than 90 percent of the Maximum Mortgage Loan Amount (because the original principal of the Permanent Mortgage Loan was reduced as a condition to delivery of the Permanent Mortgage Loan as determined by the DUS Lender) the Borrower agrees to pay to Fannie Mae a Shortfall Fee. The Shortfall Fee will be calculated in accordance with Exhibit C. The Shortfall Fee will be due and payable on the closing date of the Permanent Mortgage Loan and payment of the Shortfall Fee will be a condition precedent to the obligation of the DUS Lender to make the Permanent Mortgage Loan. Fannie Mae will apply the Good Faith Deposit towards the Shortfall Fee (or, if applicable, draw on the letter of credit held for the Good Faith Deposit). If the amount of the Shortfall Fee exceeds the Good Faith Deposit, the Borrower will be responsible to pay the excess.

SECTION 6.Reasonable Estimates. The Borrower recognizes that the occurrence of any event which gives rise to the payment of the Non-Delivery Fee or the Shortfall Fee will result in Fannie Mae incurring additional expenses, loss to Fannie Mae in not being able to purchase and own the Permanent Mortgage Loan and the interest to accrue thereon and frustration or impairment of Fannie Mae’s ability to meet its commitments to third parties. The Borrower agrees that, in the event of any such event, Fannie Mae shall be entitled to actual damages for the detriment caused thereby, but that it is extremely difficult and impractical to ascertain the extent of such damages. The Borrower acknowledges and agrees that the Good Faith Deposit, the Non-Delivery Fee and the Shortfall Fee represent reasonable estimates of such damages to Fannie Mae. The Borrower further acknowledges that this Certificate is a material part of the consideration for the Permanent Mortgage Loan Commitment, the Rate Lock and the Forward Commitment.

SECTION 7.Savings Provision. Nothing in Sections 3, 4 or 5 shall be interpreted to allow the Borrower to avoid its obligation to close the Permanent Mortgage Loan as required by Section 1.

SECTION 8.Interest. The Borrower agrees to pay interest on the unpaid balance of the Non-Delivery Fee or the Shortfall Fee which becomes due under this Certificate from the date such fee becomes due and payable to the date it is paid in full at the per annum rate of the Prime Rate plus four percentage points, or, if less, the highest maximum rate permitted to be charged by applicable law. The term “Prime Rate” means an annual rate of interest equal to the prime rate of interest as reported from day to day in The Wall Street Journal (notwithstanding that such publication shows the prime rate of interest for the preceding Business Day) as the base rate on corporate loans posted by at least 75 percent of the nation’s 30 largest banks, or, if such rate is no longer available, then the base rate or prime rate of interest of any “Money Center” bank designated from time to time by Fannie Mae, in its discretion. Any change in the interest rate under this Certificate due to a change in the prime rate of interest as reported in The Wall Street Journal shall take effect on the date of publication. Interest shall be computed on the basis of a 360-day year and twelve 30-day months.

SECTION 9.Additional Security. As security for the performance of the Borrower’s obligations under this Certificate, the Borrower has delivered to Fannie Mae, in care of the DUS Lender, the Security Instrument to be filed of record against the Project.

SECTION 10.Remedies. Should the Non-Delivery Fee or the Shortfall Fee become payable and not be paid when due, Fannie Mae shall have the right to take such action at law or in equity, without notice or demand, as it deems advisable to protect and enforce the rights of Fannie Mae against the Borrower and/or in and to the Project and to exercise any and all rights and remedies available to it under this Certificate and the Security Instrument.

SECTION 11.No Remedy Exclusive. Each right, power and remedy of Fannie Mae under this Certificate or under applicable law shall be cumulative and concurrent, and the exercise of any one or more of them shall not preclude the simultaneous or later exercise by Fannie Mae of any or all such other rights, powers or remedies. No failure or delay by Fannie Mae to insist upon the strict performance of any one or more provisions of this Certificate or to exercise any right, power or remedy under this Certificate constitute a waiver thereof or preclude Fannie Mae from exercising any such right, power or remedy. In order to entitle Fannie Mae to exercise any remedy reserved to Fannie Mae, it shall not be necessary to give any notice.

SECTION 12.Limits on Personal Liability. The only recourse of Fannie Mae for the satisfaction of the indebtedness evidenced by this Certificate and the performance of any other obligations of the Borrower under this Certificate or the Security Instrument shall be Fannie Mae’s exercise of its rights and remedies with respect to that certain real property and the other property described as security in the Security Instrument.

SECTION 13.Successors and Assigns Bound. This Certificate shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of and may be enforced by Fannie Mae and its successors, transferees and assigns. The Borrower shall not assign any of its rights and obligations under this Certificate without the prior written consent of Fannie Mae.

SECTION 14.Entire Agreement; Amendment and Waiver. This Certificate, together with the attached Exhibits, contains the complete and entire understanding of the Borrower with respect to the matters covered and no change or amendment shall be valid unless it is made in writing and executed by the Borrower with the written consent of Fannie Mae. No specific waiver of any of the terms of this Certificate by Fannie Mae shall be considered as a general waiver.

SECTION 15.Notices. All notices given under this Certificate shall be in writing at the address and in the manner set forth in the Security Instrument.

SECTION 16.Severability. The invalidity, illegality, or unenforceability of any provision of this Certificate pursuant to judicial decree shall not affect the validity or enforceability of any other provision of this Certificate, all of which shall remain in full force and effect.

SECTION 17.Applicable Law. This Certificate shall be governed by and construed in accordance with the laws of the jurisdiction in which the Project is located.

SECTION 18.Acceptance. The Borrower waives any requirement that Fannie Mae accept or give notice of acceptance of this Certificate.

BORROWER:
By:
Name:
Title:
Date:

Borrower Certificate – Cash and Rate Lock Loan

Financing Methods

/ Form 4566.MAH.Funded.RLL / Page 1

Fannie Mae

/ 08-09 / © 2005-2009 Fannie Mae

Exhibit A

Non-Delivery Fee

(Stabilization Failure)

The Non-Delivery Fee under this Exhibit A will be the greater of:

(1)2% of the Maximum Mortgage Loan Amount; or

(2)an amount calculated by multiplying:

• the difference between (i) the Note Rate for the Permanent Mortgage Loan in the Forward Commitment less the Guaranty Fee and Servicing Fee (the “Required Net Coupon Rate”) and (ii) the Required Net Coupon Rate offered for purchase by Fannie Mae for an immediate funding loan with the same terms as the Permanent Mortgage Loan in the Forward Commitment on the Final Delivery Date or, if terminated prior to the Final Delivery Date, the last day of the calendar month in which the Forward Commitment is terminated; TIMES

• the Maximum Mortgage Loan Amount; TIMES

• a present value factor, calculated using the following formula:

1 - (1+r)-n/12

r

• where:

r=the Required Net Coupon Rate used in (ii) above; and

n=the number of months in the Yield Maintenance Period Term of the Permanent Mortgage Loan in the Forward Commitment.